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Tax Talk

There’s no avoiding the tax man. But before you dig deep into receipts and tax forms, take a look at this checklist of questions for smarter filing tips and unexpected deductions for 2017.

1. Do you qualify for free tax-filing assistance?
Seventy percent of American taxpayers (about 100 million people) are eligible to participate in the Free File program. The program—a partnership between the IRS and tax software companies—offers free electronic tax preparation programs and e-filing to taxpayers whose adjusted gross income was $64,000 or less for the year. Such programs can help you better organize your paperwork and maximize your deductions. For more information, go to the Free File page on the IRS website.

2. Did you make large purchases this tax year?
If you itemize deductions on your federal tax return, you have the choice of deducting either the state and local income taxes you paid or the state and local sales taxes paid. Usually, your income tax bill is larger. But if you paid for a wedding, furnished a home, bought a vehicle or made other sizeable purchases this year, it might pay to take the sales tax deduction instead.

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And if you live in one of the seven states that don’t charge an income tax, the decision is a no-brainer. To find your total, either tally up your receipts or use the IRS online sales tax deduction calculator.

3. Where did you drive this year?
While you can’t deduct your commute to work, you can deduct your mileage for other noble purposes. If you drove to perform charitable work, move residences, receive medical care or conduct a job search in your current profession, you might be eligible to deduct either your actual vehicle expenses (gasoline, oil, tolls and parking fees) or take the IRS’ standard per-mile rate for the respective category. If you’re self-employed, you can deduct the miles you rack up on job-related jaunts such as visiting a work site or clients, mailing bills and making bank deposits.

4. Do you have a Hobby vs. a hobby?
Capital “H” hobbies are ones from which you earn some—but not a lot—of income: Think of buying and selling collectibles, competing in dog shows, making and selling crafts, etc. You have to report the income from these endeavors. You might be eligible to deduct your expenses, too—up to the same amount as your hobby income. See if you pass the hobby test at the IRS website.